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Little glimpses of improvement... might COE be on the cusp of some sustainable performance delivery...
Operations update
• Stable processing rates at the Orbost Gas Processing Plant in August – average processing rate of 41 TJ/day (Q4 FY21: 33 TJ/day)
• Sole gas sales continued at maximum daily contract quantities in August – average gas sales volume of 59 TJ/day (Q4 FY21: 54 TJ/day)
• Athena Gas Plant commissioning commenced – sales gas introduced into the plant
Serial under-performer Cooper announced results today. It might be possible that they are starting to get on top of things and with a gas price likely to rise, there might be light at the end of the tunnel.
Record sales and revenue: sales volume up 94% to 3.01 MMboe; revenue up 69% to $132 million
Record production: up 69% to 2.63 MMboe
Sole Gas Sales Agreements driving improved gas returns: ~$50 million cash margin from the Otway and Gippsland basins1; Sole cash margin kept broadly whole2
Strong second-half momentum to continue: expect material growth in FY22
– Sales volume guidance of 3.7 – 4.3 MMboe (FY21: 3.01 MMboe)
– Underlying EBITDAX guidance of $60 – 70 million (FY21: $30.0 million)
Athena Gas Plant commissioning in Q2 FY22: on schedule and on budget
Sound Balance Sheet maintained: debt adjustments finalised
Climate Active carbon neutral certification: independent audit and Australia’s first carbon neutral oil and gas producer
Crystalising and growing the value within the existing portfolio: significant gas reserves position and gas prices increasing
Results webcast scheduled for 8.30am ACST (Adelaide) / 9.00am AEST (Sydney, Melbourne)
Cooper Energy (ASX: COE) has announced record full-year production, sales volume and revenue. Commencement of the Sole Gas Sales Agreements (GSAs) and improving performance at the Orbost Gas Processing Plant (OGPP) helped drive a 69% increase in production to 2.63 MMboe, a 94% increase in sales volume to 3.01 MMboe and a 69% increase in revenue to $132 million.
Earnings and cash flow in FY21 were impacted by OGPP processing rates, OGPP reconfiguration and commissioning costs, and impacts of the Transition Agreement with APA Group (ASX: APA). Underlying EBITDAX of $30.0 million (FY20: $29.6 million) and an Underlying Net Loss After Tax of $25.9 million (FY20: $6.6 million loss) were recorded.
Managing Director David Maxwell said that despite a challenging year the strong momentum in the second half demonstrates Cooper Energy’s underlying value proposition.
“FY21 was a year of two halves, with Orbost reconfiguration works and lower production in the first half and improving Orbost performance and higher sales volume in the second half.
“Initiation of our Sole Gas Sales Agreements was a key milestone for Cooper Energy which delivered a material step-up in revenue and earnings in the second half.
19-Apr-2021: Q3 FY21 Quarterly Report
Key features
* Processing rates exclude downtime for reconfiguration works in Q2 FY21.
Comments from Managing Director David Maxwell
“Cooper Energy re-set its baseline performance during the quarter, delivering record quarterly production, sales volume and revenue.
“Improved performance from the reconfigured Orbost Gas Processing Plant underpinned our record results. Daily Orbost processing rates reached 45 TJ/day and stability improved, albeit with periodic absorber cleans still required. Ongoing plant operating improvements and capital works in FY22 have the objective of achieving further production increases and extending cleaning cycles.
“Commencement of the Sole Gas Sales Agreements in December 2020 and January 2021 was a major milestone which contributed to record quarterly performance. Sole sales revenue increased ~200% quarter-on-quarter due to higher sales volumes and less Sole gas sold on the spot market.
“Cooper Energy continues to execute its gas development strategy in a disciplined manner. With improving performance at the Orbost Gas Processing Plant and increasing cash flow, we are well positioned to continue growing gas supply for the southern markets from our Otway and Gippsland basin acreage,” Mr Maxwell said.
[Click on the link at the top for the full report. I hold COE shares.]
Also, lately:
12-Apr-2021: Transition Agreement Extension
15-Feb-2021: Half Year Results Announcement
Plus: Half Year Results Presentation and Half Yearly Report and Accounts
COE has been doing it tough over the past year, which has little to do with COVID, and everything to do with their issues with getting their Sole gas through the Orbost Gas Processing Plant (OGPP).
While they have certainly now turned the corner with that issue and are working through both the temporary and permanent fixes for it amicably enough with APA (the operators of the OGPP), they had a rough H1. Despite that, they're looking to the future, and are accentuating the positives, as you do:
Step-change in production underway
--- click on the links at the top for more ---
[I hold COE in two of my portfolios, and they are also on my Strawman.com scorecard. I see them as undervalued by the market based mostly on a temporary setback, so I see upside once they get the gas flowing properly [consistent high volumes, no regular stoppages] through APA's OGPP. It is in the interests of both parties [COE + APA] to sort this out, and all information I read suggests that they are doing just that, hence the upside once the good news flows along with the gas.]
30-Oct-2020: Quarterly Activities Report
Key features:
Managing Director’s comments:
“Our results show good progress made against our task list for FY21.
"The August Transition Agreement with APA led to successful single absorber trials, commitment to plant reconfiguration works and preparation for the initiation of the Sole gas supply agreements from December. FID has been taken on the Athena Gas Plant Project, which is now underway and first gas is expected in under 12 month’s time. Our gas production and revenue has continued to grow notwithstanding the lower spot gas prices.
“The achievement of Carbon Neutrality for our operations in FY20 was the culmination of extensive research and engagement with shareholders and carbon offset project providers. We are delighted to achieve carbon neutrality through a high-quality domestic project with long term benefits to a region of major environmental significance. We are now working with the relevant bodies to secure formal certification of this status.
“The coming months are expected to see the pace of activity pick up as Orbost plant works are conducted, then Sole production resumes and we initiate the Sole term gas sales contracts”.
--- click on link above for the full report ---
Also today: (30-Oct-2020) COE: Sole GSAs commencement and Orbost plant work commitment
These links are to today's announcements via Cooper Energy's own website: https://www.cooperenergy.com.au/investor-information/asx-announcements
[I hold COE shares. They are trading at a decent discount to their peers due to the issues they are having with the Orbost Gas Processing Plant (OGPP) which are addressed in today's announcement. As I have stated before, the issues are temporary IMO, not structural, and it is in the interests of both APA (the operators of the OGPP and the associated gas transmission pipelines) and COE to get this sorted ASAP. I view both SXY (Senex Energy) and COE (Cooper Energy) as excellent exposure to increasing Australian east coast and south east coast Natural Gas demand, which should lead to higher prices over time, so I hold both. I view COE as the bargain stock in the sector due to their current OGPP issues.]
19-June-2020: Sole Orbost Update 19 June 2020
APA have advised COE of some issues with the commissioning of the Orbost Gas Processing Plan which will result in another 6 day shutdown - starting tomorrow or Sunday - and that the plant may need further modification - which could take up to 3 weeks (offline).
I hold COE shares and I view these issues as temporary, not structural.
21-Apr-2020: Quarterly Activities Report
Also: 21-Apr-2020: APA: APA Market Update - Change to Earnings Guidance
06-Sep-19: New gas field discovery at Annie
As expected, that has been a positive catalyst for COE. They closed up 6% at 62 cents on that news, but traded today as high as 68.5 cents, some 17% above the 58.5c they closed at yesterday.
While the discovery of new commercial gas deposits is always a nice surprise, they were drilling between two currently producing gas fields - so not a total surprise that they found gas there.
I'm a happy owner of COE - which have good management - and provide excellent exposure to Australian domestic east coast gas demand.
18-Feb-2020: Sole Gas Project update
I hold COE shares. This is a game-changer for COE. Not long now! Good exposure to Australian east coat natural gas demand. Good management. Smaller player, becoming bigger.
Pendal (the old BT / Bankers Trust) became substantial holders of COE shares on Feb 10. Other current substantial shareholders include Mitsubishi UFJ Financial Group (who bought the Colonial First State Global Asset Management [CFSGAM] business from CBA and have now rebranded it as First Sentier Investors), Greencape Capital, CBA and Challenger (ASX:CGF). There's some smart money on the register. Their MD, David Maxwell, owns over 22 million COE shares, and every other board member is also a shareholder, with one (Hector Gordon) owning over 4m shares. They have skin in the game.
12-Aug-2019: Cooper Energy FY19 Full Year Results release
FY19-FY20 Outlook Investor presentation
Disclosure: I hold COE shares.
17-June-2019: Sole Pipeline Update
Sole Gas Project Update
Cooper Energy (ASX: COE) advises the offshore activities to undertake the repair and testing of the Sole subsea pipeline have been completed.
The offshore component of the Sole Gas Project is forecast to be within the budget cost of $355 million. Work on the onshore element of the project by APA to upgrade the Orbost Gas Plant to process gas from Sole is advancing. APA have advised Cooper Energy that the plant will be ready to receive and process the first Sole gas in the September quarter 2019. APA and Cooper Energy continue to work closely to ensure the safe and reliable completion of the Sole Gas Project.
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Disclosure: I hold COE shares.